America runs on data. Let’s make sure everyone gets it.
By Robert Wack
Oct 24, 2018
If you’ve lived without electricity for some period of time, whether by choice or circumstance, you know how challenging life is without it. All your time is consumed hand-washing clothing and dishes, foraging for ice, perhaps even building fires for cooking if you don’t have gas. If you’re lucky, it’s just a hardship. If you rely on electrically powered medical equipment, it could be life-threatening.
In the 21st century, data is becoming like electricity: It plays an essential role in accomplishing daily activities and acting as the lifeblood of the economy. Without reliable and abundant access to data, modern life moves more slowly and is far less efficient. Just as the American middle-class livelihood has long been unimaginable without electricity, it is now impossible to conceive of life without data. Access to data is the oxygen of the 21st-century economy, and we suffocate when there isn’t enough. Unfortunately, over one-third of rural Americans still lack adequate access to broadband, which is necessary for high-speed data transmission.
Like other utilities, broadband requires infrastructure. Governments have historically recognized the economic development value of publicly developed infrastructure: roads, canals, bridges, electricity generation, and water systems. We spend billions every year on these projects because we know the economy cannot prosper without them. Telecommunications infrastructure should be no different.
Instead of widespread availability of high-speed internet, the U.S. suffers from disparate access to sufficient broadband and generally mediocre service relative to other developed countries — the unfortunate legacy of a regulatory system that significantly favors incumbent monopolies. Decades ago, this protection made sense due to the constraints of the available technologies and the capital-intensive nature of the early telecom infrastructure — made up of copper wires, mechanical switches, and manually operated controls. In short, the investment was prudent only if telecom companies were guaranteed control of the customer.
Technology has transformed this market. Thanks to fiber optics and networking protocols, it’s now possible to separate telecom infrastructure into at least three independent layers: infrastructure, operations, and services, transforming the economics of telecom. This has erased the need for telecom companies to maintain monopolies over broadband infrastructure. Americans would be better served today under a new model that promotes shared ownership.
An instructive analogy is roads. When a local pizza delivery business starts up, all it has to do is make a good pizza and figure out a way to get it to you. It does that by using roads that are publicly constructed, maintained, and owned. Imagine how many fewer pizza delivery businesses there would be if each one had to build their own road to get that pizza to you. It’s far more efficient for delivery services to share publicly owned infrastructure. It’s better for the local economy, cheaper for local business, and better for the consumer because it enables competition and choices.
So it should be with telecom. Municipally owned infrastructure like fiber-optic networks — especially ones that are shared — enable competition, better services, and lower prices for residents in those jurisdictions.
Access to data is the oxygen of the 21st-century economy, and we suffocate when there isn’t enough.
Many of our disparities in broadband services, especially in sparsely populated rural areas, are due to the private-sector imperative to generate a sufficient return on investment over a fairly short time frame, typically five years. If companies can’t recoup their investment over the course of a few years, they don’t make the initial investment — constraining residents to subpar broadband. Closing those gaps in access will require government to step in, just like with rural electrification in the last century. Local governments can still recover their broadband investments in rural areas, just over much longer time frames.
Telecom monopolies argue that public investment in telecom is interfering with the market, and only the private sector should solve problems of disparities and service levels. This is like saying FedEx and UPS should be building their own highways, roads, and driveways because public roads interfere with free markets.
Abundant examples are available illustrating how shared public telecom infrastructure works. In Stockholm, Sweden, the municipal fiber utility Stokab builds, owns, maintains, and leases fiber-optic strands to any provider all over Stockholm. This utility is now an engine of economic growth, stimulating up to 50 percent of new real estate development because of demand for access to fiber.
Closer to home, my hometown of Westminster, Maryland, uses a similar model, with the city building the fiber in partnership with the internet service provider, Ting. City responsibility is for only the “dark” elements of the network: conduit, handholes, enclosures, and fiber-optic cable. Ting installs the equipment, powers it and lights the fiber, and handles all customer service interactions. They pay the city a lease fee to use the fiber. The lease fee is structured to eventually cover all the debt service for the bonds taken to finance the construction of the network. To date, the project is meeting all its milestones and is on track for success.
Around the country, there are many other models for successful municipal fiber projects involving revenue bonds, public-private partnerships, publicly owned electric utilities, and other even more innovative structures.
Despite the diversity of all these models for municipal broadband, a common element unifies them: political will. In every case, local elected officials recognized their communities were suffocating from inadequate broadband, and they took on the hard work and difficult decisions to put their communities in position to grow and thrive in the data-driven 21st-century economy. The rest of the country can benefit in the same way if every level of government — federal, state, and local — aligns its efforts. It’s not easy or cheap, but it can be done.
Robert Wack is President of the Westminster, MD, Common Council, as well as a practicing pediatrician at local hospitals, and a municipal telecom consultant. He served in the United States Army Medical Corps, and volunteers with several local non-profit organizations, including MAGIC (the Mid-Atlantic Gigabit Innovation Collaboratory), working on economic development leveraging the capabilities of the Westminster Fiber Network.